THAILAND: Bangkok seeks $4.4b from Temasek-linked TV station

Prime Minister's Office orders Temasek Holdings' television station to pay nearly 100 billion baht in concession fees and fines or face breach of contract

Straits Times
Friday, December 15, 2006

By Nirmal Ghosh

Bangkok --- The Thai Prime Minister's Office yesterday ordered a Thai TV station controlled by Singapore's Temasek Holdings to pay close to 100 billion baht (S$4.42 billion) in fees and fines.

iTV has to pay 2.21 billion baht in concession fees and 97.76 billion baht in fines within 45 days, said the permanent secretary in the Prime Minister's Office, Mr Chulayuth Hirunyavasit.

The order follows a ruling on Wednesday by Thailand's Supreme Administrative Court, which found iTV in breach of its contract with the Prime Minister's Office, which owns the concession under which it operates.

The TV station is owned by Temasek through its interest in Shin Corp, the telecoms-based conglomerate sold to it in January by former Thai prime minister Thaksin Shinawatra.

If the company fails to pay within 45 days, there would be a second deadline, Mr Chulayuth said.

"If they don't meet the second deadline, it means that iTV has breached a contract," he added.

The announcement has all but dashed the hopes of iTV and Temasek that the government would reduce the fees and penalty associated with the breach.

There remains only a faint flicker of hope, with Mr Chulayuth saying that the Cabinet would be informed of the figure and would decide if it was reasonable.

But even a reduced amount would be beyond iTV's means, analysts said yesterday.

They said that iTV's total assets are worth 3.7 billion baht, so the government's order could bankrupt the company.

Yesterday, iTV shares plunged 30 per cent to 0.63 baht. Temasek declined comment when contacted yesterday.

The TV station was controversial well before Mr Thaksin sold his stake in Shin Corp to Temasek.

iTV was set up in the mid-1990s under a media liberalisation agenda that envisaged it as a neutral broadcaster.

Most of Thailand's radio and TV stations are state-controlled.

Under the terms of its licence, iTV was supposed to carry a stipulated percentage of news content.

But the 1997 financial crisis hurt its bottom line, and in 2000 Mr Thaksin bought a controlling stake in it through Shin Corp.

Under Shin, the entertainment to news ratio changed in favour of entertainment, which became a source of irritation for critics who said that it violated the original intent in setting it up.

In 2004, an arbitration panel ruled that the increase in entertainment programming was permissible, and reduced the amount paid to the government in licence fees.

But in June this year, the Central Administrative Court invalidated the panel's ruling -- a decision iTV contested up until the final decision against it on Wednesday.

Thai coup leaders yesterday said that iTV might be saved from bankruptcy and set up on lines similar to Britain's BBC.

Air force chief Chalit Phukphasuk said that options included state ownership and allowing new investors to take over.

"iTV won't disappear from Thailand because it is a very useful organisation. We won't make a thousand iTV staff jobless," he said.